Dana Reports First-Quarter 2013 Results, Affirms 2013 Earnings Outlook

MAUMEE, Ohio, April 25, 2013 /PRNewswire/ -- Dana Holding Corporation (NYSE: DAN) today announced results for the first quarter of 2013.  Sales were $1.68 billion, compared with $1.96 billion for the same period in 2012.  Lower market volumes, principally the North American commercial vehicle and European and Asian off-highway markets, reduced year-over year sales by about $159 million, with light-vehicle program roll-offs and a divestiture a year ago reducing sales by an additional $101 million.

In line with reduced sales, net income for the quarter was $42 million, compared with $70 million for the same period in 2012, and the company's diluted adjusted earnings per share (EPS) was $0.28, compared with $0.44 in the first quarter of 2012.

Adjusted EBITDA for the quarter was $158 million, compared with $212 million for the prior-year period. The reduction was driven mostly by lower sales volumes, which accounted for about $44 million of the decrease.  In addition, the devaluation of the Venezuelan bolivar in February further reduced adjusted EBITDA in the Light Vehicle Driveline segment by $11 million, representing a margin impact of 70 basis points in the quarter.  The company implemented recovery actions and expects to offset the majority of this impact over the remainder of 2013. These factors were partially offset by improved pricing and cost performance in the quarter. 

Overall, adjusted EBITDA as a percent of sales for the quarter was 9.4 percent (10.1 percent excluding the Venezuelan currency devaluation), compared with 10.7 percent for the same period in 2012 and 9.6 percent in the fourth quarter of 2012.

Free cash flow was a use of $44 million in the quarter principally reflecting seasonal working capital outflows of $98 million, semi-annual interest payments on the company's unsecured senior notes of $30 million and capital spending of $29 million. This compares with $37 million during the first quarter of 2012, excluding a one-time voluntary contribution of $150 million to Dana's U.S. pension plans.

"Demand levels in a number of our key markets provided a bit of a headwind for us in the first quarter, but overall results were in line with our expectations.  We continue to achieve solid margins in spite of challenging market conditions by focusing on those levers within our control," said company President and Chief Executive Officer Roger J. Wood.  "Three of our four businesses improved EBITDA margins over last year's fourth quarter, further evidencing our continued focus on cost flexibility and contribution margins." 

The company purchased about 1.4 million shares at a cost of about $24 million under its share repurchase program during the quarter.  Since the board of directors authorized the program in October, Dana has repurchased about 3.6 million shares of common stock through April 23, resulting in $58 million being returned to shareholders.  In addition, the board declared a common stock dividend of $0.05 per share payable May 31 to shareholders of record as of May 10.  These actions demonstrate Dana's commitment to returning value to its shareholders.

Company Affirms 2013 Financial Targets
Dana affirmed its financial targets for full-year 2013:

• Sales of approximately $7.1 billion,
• Adjusted EBITDA of $800 million to $820 million,
• Adjusted EBITDA as a percent of sales of approximately 11.4 percent, 
• Diluted adjusted EPS of $1.88 to $1.95 (excluding the impact of Dana's share repurchase program),
• Capital spending of $180 million to $200 million, and
• Free cash flow of $240 million to $260 million.

"We expect to capitalize on improved volumes through the remainder of the year.  In particular, the performance of our Commercial Vehicle Driveline business is dependent on an expected uptick in market demand, and we are closely watching releases from our customers," Mr. Wood said.  "By continuing to maintain our operational flexibility and executing our business model, we are confident in our ability to drive margins commensurate with top line growth."

Dana Earns PACE Awards
Dana earned a 2013 Automotive News PACE Award for its innovative Spicer® Diamond Series™ driveshaft.  This industry-first one-piece aluminum driveshaft utilizes Dana's advanced proprietary manufacturing processes to significantly reduce weight by up to 40 percent while maintaining the strength of an all-steel system.  The result is a very robust and significantly lighter driveshaft for improved fuel efficiency and load-carrying capacity.

This driveshaft eliminates the need for a center bearing, helping to reduce component complexity and weight by up to 100 pounds.  Additionally, the Spicer® Diamond Series™ driveshaft requires no exterior tube painting and eliminates the metal inert gas (MIG) welding process, helping to reduce emissions during manufacturing.

New Technologies Introduced
Dana introduced a number of new products in the first quarter aimed at targeting specific market-value drivers, such as fuel economy, emissions control, and total cost of ownership. These technology solutions include:

• Best-in-class Spicer® AdvanTEK® 40 tandem axles for line-haul Class 8 trucks that improve fuel efficiency and reduce total cost of ownership;
• Enhanced Spicer Life Series® driveshafts capable of handling greater torque capacities than any other driveshaft in the class;
• Spicer® EconoTrek™ tandem axles that reduce weight by up to 450 pounds, delivering between a 2 and 3 percent improvement in fuel efficiency;
• Spicer® electric-vehicle gearbox with an optimized gear ratio that provides increased acceleration, enabling drivers to reach highway speeds more quickly; and
• A new Spicer® TE30 powershift transmission that provides reach stackers and heavy-duty forklift trucks with greater fuel economy and lower cost of ownership.

New Technical Research Center Opens in China
Dana also celebrated the opening of its new 129,000 square-foot technical center in Wuxi, Jiangsu Province, China. The Dana China Technical Center provides advanced product and applications engineering for original-equipment manufacturers in the light-vehicle, commercial-vehicle, and off-highway markets in China and throughout the Asia-Pacific region.

Conference Call Scheduled for 10 a.m. EDT Today
Dana will discuss its first-quarter results in a conference call at 10 a.m. EDT today.  Participants may listen to the conference call via audio streaming online or telephone. Slide viewing is available via Dana's investor website – www.dana.com/investors.  United States and Canadian locations should dial 888-311-4590 and international locations should call 706-758-0054, and enter 31782394.  Please ask for the "Dana Holding Corporation Financial Webcast and Conference Call."  Phone registration will be available starting at 9:30 a.m. 

An audio recording of the webcast will be available after 5 p.m. today; dial 855-859-2056 (U.S. or Canada) or 404-537-3406 (international) and enter 31782394.  A webcast replay will be available after 5 p.m. today, and may be accessed via Dana's investor website.

Non-GAAP Financial Information
This release refers to adjusted EBITDA, which we have defined to be earnings before interest, taxes, depreciation, amortization, equity grant expense, restructuring expense and other nonrecurring items (gain/loss on debt extinguishment or divestitures, impairment, etc.).  The most significant impact on Dana's ongoing results of operations as a result of applying fresh start accounting following our emergence from bankruptcy was higher depreciation and amortization.  By using adjusted EBITDA, a performance measure that excludes depreciation and amortization, the comparability of results is enhanced.  Management also believes that adjusted EBITDA is an important measure since the financial covenants in our debt agreements are based, in part, on adjusted EBITDA.  Adjusted EBITDA should not be considered a substitute for income (loss) before income taxes, net income (loss) or other results reported in accordance with GAAP.   Adjusted EBITDA may not be comparable to similarly titled measures reported by other companies.

Diluted adjusted EPS is a non-GAAP financial measure that we have defined as adjusted net income divided by adjusted diluted shares.  We define adjusted net income as net income (loss) attributable to the parent company, excluding restructuring expense, amortization expense and nonrecurring items (as used in adjusted EBITDA), net of any associated income tax effects.  We define adjusted diluted shares as diluted shares as determined in accordance with GAAP based on adjusted net income.  This measure is considered useful for purposes of providing investors, analysts, and other interested parties with an indicator of ongoing financial performance that provides enhanced comparability to EPS reported by other companies.  Diluted adjusted EPS is neither intended to represent nor be an alternative measure to diluted EPS reported under GAAP.

Free cash flow is a non-GAAP financial measure that we have defined as cash provided by (used in) operating activities, less purchases of property, plant, and equipment.  We believe this measure is useful to investors in evaluating the operational cash flow of the company inclusive of the spending required to maintain the operations.  Free cash flow is neither intended to represent nor be an alternative to the measure of net cash provided by (used in) operating activities reported under GAAP.  Free cash flow may not be comparable to similarly titled measures reported by other companies.

Please reference the "Non-GAAP financial information" accompanying our quarterly earnings conference call presentations on our website at www.dana.com/investors for our GAAP results and the reconciliations of these measures, where used, to the comparable GAAP measures.

Forward-Looking Statements
Certain statements and projections contained in this news release are, by their nature, forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995.  These forward-looking statements are based on our current expectations, estimates and projections about our industry and business, management's beliefs, and certain assumptions made by us, all of which are subject to change.  Forward-looking statements can often be identified by words such as "anticipates," "expects," "intends," "plans," "predicts," "believes," "seeks," "estimates," "may," "will," "should," "would," "could," "potential," "continue," "ongoing," similar expressions, and variations or negatives of these words.  These forward-looking statements are not guarantees of future results and are subject to risks, uncertainties and assumptions that could cause our actual results to differ materially and adversely from those expressed in any forward-looking statement. 

Dana's Annual Report on Form 10-K, subsequent Quarterly Reports on Form 10-Q, recent Current Reports on Form 8-K, and other Securities and Exchange Commission filings discuss important risk factors that could affect our business, results of operations and financial condition.  The forward-looking statements in this news release speak only as of this date. Dana does not undertake any obligation to revise or update publicly any forward-looking statement for any reason.

About Dana Holding Corporation
Dana is a world-leading supplier of driveline, sealing, and thermal-management technologies that improve the efficiency and performance of passenger, commercial, and off-highway vehicles with both conventional and alternative-energy powertrains.  The company's global network of engineering, manufacturing, and distribution facilities provides original-equipment and aftermarket customers with local product and service support.  Based in Maumee, Ohio, Dana employs more than 23,000 people in 26 countries and reported 2012 sales of $7.2 billion.  For more information, please visit www.dana.com.

SOURCE Dana Holding Corporation